Analysis: NHL owners gambling lockout will bring new riches

September 17, 2012|Steve Keating | Reuters

TORONTO (Reuters) - The National Hockey League (NHL) and its players are gambling once again that a work stoppage will not harm relationships with sponsors or rattle fan loyalty in a still-challenging economic environment.

The NHL locked out players over the weekend after failing to reach a new collective bargaining agreement before the old pact expired, plunging the league into its fourth work stoppage in 20 years and making Friday's start to the preseason unlikely.

So instead of fans getting excited for the start of the NHL regular season next month, many were left downcast on Monday and wondering when, or if, they will see their favorite teams back on the ice this year.

Confronted with yet another showdown between millionaire athletes and billionaire owners, the NHL and its players will again roll the dice and test the loyalty of sponsors, business partners and fans suffering from lockout fatigue.

With memories of the labor dispute that wiped out the entire 2004-05 NHL season still fresh in their minds, fans have started looking for other ways to spend their entertainment budget while players search for work in foreign leagues and networks scramble to find alternate programming.

As negotiations drag on the grim impact of the lockout will hit home as the league and teams begin to announce layoffs while those who earn their living around the sport selling beer in arenas and supervising parking lots, will try to find ways to survive in a still sluggish economy.

"There is a lockout fatigue going on and no one is a winner in those situations," Jason Maloni, a sports crisis communications expert and a senior vice-president of Levick told Reuters. "It's always good to have goodwill with the public.

"But this isn't a time in North America when anyone is going to be sensitive to somebody already getting vast sums demanding much more."

With teams drowning in red ink, the NHL sacrificed the entire 2004-05 season to get the salary cap hailed as the answer to its financial woes.

Players and league officials also used the previous lockout to rework the game and returned with a more entertaining product that has been embraced by fans and sponsors.

In the seven-years since the deal was signed the NHL has seen revenues surge from to $3.3 billion from $2.1 billion along with record attendance and television ratings.

Innovative marketing ideas such as the annual outdoor game played on New Year's Day have raised NHL's profile and helped secure a new 10-year $2 billion television deal with NBC.

But after watching owners from the National Basketball Association and National Football League secure a bigger slice of their respective revenue pies after locking out their players last year, NHL owners want the same.

MASSIVE GAMBLE

The NHL initially wanted players to cut their share of hockey-related revenue to 43 percent from 57 percent but have amended that to a six-year deal that starts at 49 percent and drops to 47 percent.

The proposal from the NHL Players' Association (NHLPA) is tied to projected future revenues with players willing to take a smaller slice of the pie as the league grows. The union's offer opens with players getting 54.3 percent of revenues and dipping to 52.7 percent.

The lockout represents a massive gamble on the part of the owners, who could have the brakes slammed on their momentum, particularly in the United States where they have started to emerge as a major player on the sporting landscape.

There are also other dangers lurking given the originally scheduled October 11 start to the regular season also in peril.

The NHLPA has so far negotiated within the framework of the previous labor deal but union chief Donald Fehr has hinted that if talks drag on, the players might be prepared to challenge the issue of a salary cap.

"While the NHL is on stronger financial footing it is actually a bad time to have a lockout," said Maloni. "At a time when the league is gaining momentum, it's stronger now in terms of its balance sheet, its casual fan base. Are they going to lose fans?

"The people who follow hockey are always going to follow hockey and wait patiently until it returns.

"But success or failure sometimes depends on how many of the new eyeballs you bring to the table. Those are the ones who will fade out and you're not going to get those fans back."

With no new talks scheduled the public relations battle has begun, players and owners placing the blame for the lockout and any the damage it might cause to the game at each other's feet.

The NHLPA has posted a video lamenting the lockout insisting all they want is to play hockey while owners have retreated back into their other businesses letting league commissioner Gary Bettman handle negotiations.

"Generally no comment is not going to help the situation," said Maloni, who represented pitching great Roger Clemens during his recent doping scandal and litigation. "You want to be able to articulate the stories behind the attorneys.

"It is a lot like litigation, as you are discussing the case behind the scenes with a judge or opposing council trying to negotiate a settlement you want your public comments to reinforce that.

"What you never want to convey is that both sides are sitting there with their arms folded."